U.S. v. Fraza

• Decision Date: 08 January 1997
• Docket Number: Nos. 96-1219,96-1220,s. 96-1219
• Citation: 106 F.3d 1050
• Parties: UNITED STATES of America, Appellee, v. Scott FRAZA, Defendant, Appellant. UNITED STATES of America, Appellee, v. James FRAZA, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1050

106 F.3d 1050

UNITED STATES of America, Appellee, v. Scott FRAZA, Defendant, Appellant.

UNITED STATES of America, Appellee, v. James FRAZA, Defendant, Appellant.

Nos. 96-1219, 96-1220.

United States Court of Appeals First Circuit.

Heard Jan. 8, 1997.

Decided Feb. 18, 1997.

W. Kenneth O'Donnell with whom D'Agostino & O'Donnell and Anthony M. Traini were on brief, Providence, RI, for appellant Scott Fraza.

Anthony M. Traini with whom W. Kenneth O'Donnell and D'Agostino & O'Donnell were on brief, Providence, RI, for appellant James Fraza.

Ira Belkin, Assistant United States Attorney, with whom Sheldon Whitehouse, United States Attorney, was on brief, Providence, RI, for appellee.

Before SELYA, Circuit Judge, ALDRICH, Senior Circuit Judge, and BOUDIN, Circuit Judge.

BAILEY ALDRICH, Senior Circuit Judge.

James Fraza and his son Scott ("James" and "Scott," collectively "defendants") were indicted on various counts of fraud, 18 U.S.C. §§ 2, 1041, 1341, 1344, 1346, and violations of the Taft-Hartley Act, 18 U.S.C. § 371, arising from a scheme to defraud a credit union. After a four day jury trial, both defendants were found guilty on all counts and now appeal their convictions and sentences. We affirm, with a minor exception.

I. Background

In 1989, James offered to purchase 80 acres of land in Coventry, Rhode Island, from George Dupont ("Dupont"). The agreed upon price was $120,000, financing to include Dupont holding a mortgage of $60,000. James signed a Purchase and Sale agreement and gave Dupont a $2,000 deposit check, but it required additional financing to complete the sale.

In April of 1990, James met with officers of the Coventry Credit Union ("CCU"). During this meeting he told the officers that the purchase price of the property was $205,000 and that he was seeking to finance $160,000. They informed him that due to his prior bankruptcy, no such loan could be granted. James then suggested that his son Scott purchase the property and take the loan. The CCU officers agreed to consider the request, but cautioned that Scott would likely require a co-signer due to his youth and short credit history.

In May of 1990, James and Dupont attended an informal "closing" in the back seat of the car of Leo Dailey ("Dailey"), an attorney whose firm had represented CCU for over twenty years. Dupont signed two closing statements--one reflecting the actual purchase price of $120,000 and the other blank. Dailey told Dupont he needed the blank form to make a correction to a tax computation. At the same time, Dupont endorsed a deed conveying the property to Scott's construction company. No money or financial instruments changed hands at this time. After two abortive attempts, James found a cosigner and CCU approved a $160,000 loan based on the inflated purchase price of $205,000. CCU's appraisal of the fair market value of the property came in at $225,000.

The "formal" closing was held on June 15. Present were James, Scott, Scott's co-signer, a CCU loan officer and Dailey who was acting as CCU's attorney. Dailey explained that Dupont was unavailable and produced the signed blank closing form. He then filled in the purchase price as $205,000. After Scott signed, the loan officer disbursed $160,000 to Dailey who then paid the closing costs, the existing $58,740 mortgage on the property and gave the remaining approximately $95,000 to Scott who in turn paid Dailey $5,000 for his work. A short time later Dupont received Scott's signed promissory note and mortgage in the amount of $60,000 in the mail. Dupont was not informed that CCU held a $160,000 first mortgage on the property.

Within six months of the sale, Scott filed for bankruptcy. As part of bankruptcy proceedings, both defendants, represented by Dailey, gave deposition testimony that they had given CCU an inflated price for the Dupont property. At approximately the same time, Dailey's law firm mailed Dupont a tax form indicating that Dupont had received $205,000 from Scott for the property. In response to Dupont's complaints, he was provided with a corrected tax form but, along with it, he received a copy of the closing statement stating the purchase price as $205,000.

Also about this time, the loan to Scott became delinquent and CCU discovered that the actual purchase price of the property was $120,000 instead of $205,000 and the existence of two different closing statements. Dailey's law firm, wanting to keep CCU as a client, arranged for its pension fund to pay CCU $160,000 and take over the mortgage.

In October 1993, James, Scott and Dailey were indicted on charges of bank fraud, mail fraud, making false statements to a federally insured lending institution, aiding and abetting, and conspiracy under the Taft-Hartley Act to commit these offenses. Dailey died prior to trial. James and Scott were found guilty on all counts and sentenced to 37 months and 24 months respectively. Both were also sentenced to identical terms of supervised release, joint and several restitution of $54,000 to Dupont, $200 in special assessments and reimbursement of all attorney's fees and expert witness fees paid pursuant to the Criminal Justice Act ("CJA").

II. Discussion

Defendants raise multiple grounds on appeal encompassing issues relating to indictment, trial and sentencing. For clarity's sake we address these issues in chronological order.

A. Indictment

Defendants contend that Count II, knowingly making false statements to a federally insured lending institution, 18 U.S.C. § 1014, and Count III, bank fraud, 18 U.S.C. § 1344, are multiplicitous, thereby violating the Double Jeopardy Clause of the Fifth Amendment of the Constitution.

Our analysis begins with application of the test laid out in Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932), which provides that double jeopardy is not implicated if, when comparing two offenses arising out of the same transaction, each offense "requires proof of an additional fact which the other does not." Id. at 304, 52 S.Ct. at 182. This analysis is sometimes referred to as the Blockburger "elements test."

In United States v. Norberg, 612 F.2d 1 (1st Cir.1979), we set forth the elements to be proven under 18 U.S.C. § 1014. They are:

(1) that the [Institution's] deposits were [federally insured];

(2) that the defendant made false statements to the [Institution];

(3) that the defendant knew the statements were false; and

(4) that the statements were materially false and made for the purpose of influencing the [Institution] to make a loan or advance.

Id. at 3. More recently, in United States v. Brandon, 17 F.3d 409 (1st Cir.), cert. denied, 513 U.S. 820, 115 S.Ct. 80, 130 L.Ed.2d 34 (1994), we construed the elements of bank fraud under 18 U.S.C. § 1344 as:

(1) engag[ing] in a scheme or artifice to defraud, or ma[king] false statements or misrepresentations to obtain money from;

(2) a federally insured financial institution; and

(3) d[oing] so knowingly.

Id. at 424.

Thus, on the plain language of these statutes, the requirements of Blockburger are satisfied. Section 1014 contains an element not contained in § 1344, that is, proof that the statements were "materially false." Likewise, § 1344 encompasses a "scheme or artifice to defraud," which is not an element of § 1014. Defendants, nonetheless, urge us to adopt the opinion of a divided Second Circuit in United States v. Seda, 978 F.2d 779 (2d Cir.1992), which held that §§ 1014 and 1344, when arising from the same offense, are multiplicitous. 978 F.2d at 781. We do not agree.

In Seda, the court moved beyond Blockburger statutory analysis, relying instead on Whalen v. United States, 445 U.S. 684, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980), where the Court held that counts of rape and felony murder were not separate offenses because in that case "proof of rape [was] a necessary element of proof of the felony murder." 445 U.S. at 694, 100 S.Ct. at 1439. We read Whalen, however, as the rule only in cases of lesser or greater included offenses, see United States v. Dixon, 509 U.S. 688, 698, 113 S.Ct. 2849, 2857, 125 L.Ed.2d 556 (1993), for which rape and felony murder qualify, but bank fraud and making false statements to a federally insured lending institution do not. Indeed, in Dixon, the Court overruled the "same conduct" test of Grady v. Corbin, 495 U.S. 508, 110 S.Ct. 2084, 109 L.Ed.2d 548 (1990) id. at 711-12, 113 S.Ct. at 2864, and reaffirmed the mandatory application of Blockburger statutory analysis. Id. at 696, 113 S.Ct. at 2855-56; cf. United States v. Wolfswinkel, 44 F.3d 782, 785 (9th Cir.1995) (finding Seda non-viable in the wake of Dixon ). Although the Blockburger elements test is mechanistic and often criticized, we are already bound by it. Rossetti v. Curran, 80 F.3d 1, 6 (1st Cir.1996); United States v. Black, 78 F.3d 1, 4 (1st Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 254, 136 L.Ed.2d 180 (1996). Because it is possible to violate either statute without violating the other, we believe the best view is that these two counts are not multiplicitous.

B. Trial

First, defendants contend that as regards Count IV, Mail Fraud, there was no evidence that co-conspirator Dailey mailed, or caused to be mailed, the mortgage to Dupont. The evidence, however, shows that when Dupont received the mortgage in the mail, the return address on the envelope was that of Dailey's law firm. In addition, the jury heard evidence that Dailey acted as closing attorney in this transaction and recorded the mortgage. From this testimony a reasonable jury could infer that Dailey mailed the mortgage to Dupont.

Defendants next maintain that deposition testimony given by each defendant during Scott's bankruptcy proceeding was non-admissible as former testimony under Fed.R.Evid. 804(b)(1) because neither defendant had motive or opportunity to cross-examine the other. This is a misconception. In the first place, each deposition was redacted to apply only to the...